Cass v. Composite Industries of America, Inc.

2002 MT 226, 56 P.3d 322, 311 Mont. 406, 2002 Mont. LEXIS 486
CourtMontana Supreme Court
DecidedOctober 10, 2002
Docket00-716
StatusPublished
Cited by4 cases

This text of 2002 MT 226 (Cass v. Composite Industries of America, Inc.) is published on Counsel Stack Legal Research, covering Montana Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cass v. Composite Industries of America, Inc., 2002 MT 226, 56 P.3d 322, 311 Mont. 406, 2002 Mont. LEXIS 486 (Mo. 2002).

Opinion

JUSTICE REGNIER

delivered the Opinion of the Court.

¶1 Respondent Delores A. Cass filed a Complaint in the Thirteenth Judicial District Court, Yellowstone County, against Appellants Composite Industries of America, Inc., CS&S Enterprises, Merle A. Ferguson, and Affordable Homes of America, Inc., (collectively “Ferguson”), which alleged Ferguson defrauded her out of nearly one million dollars. After a default was entered against Ferguson, the District Court denied a motion to set it aside. The District Court ultimately entered judgment against Ferguson in the amount of $1,736,547.20 from which Ferguson appeals. We affirm.

¶2 The sole issue on appeal is whether the District Court erred when it refused to set aside the default against Ferguson.

BACKGROUND

¶3 On October 30, 1998, Cass filed a Complaint against Ferguson which alleged that Ferguson defrauded her out of nearly one million dollars. Cass properly served Ferguson with the Summons and Complaint. In January of 1999, Cass served Ferguson with Plaintiffs First Discovery Requests. Ferguson failed to answer the Complaint. On April 30, 1999, Cass applied for, and the Clerk of Court entered, a default against Ferguson.

¶4 Since Ferguson failed to respond to Cass’s discovery requests, Cass filed a Motion to Compel discovery responses on May 26, 1999. Prior to a hearing on Cass’s discovery motion, Ferguson filed a Motion to Set Aside the Default. On June 16, 1999, while the Motion to Set *408 Aside the Default was pending, Cass filed her First Amended and Supplemental Complaint.

¶5 On June 25,1999, following a hearing, the District Court granted Cass’s Motion to Compel, ordering Ferguson to provide certain responses by July 1, 1999, and the remaining responses by July 16, 1999. The court farther ordered Ferguson to make a showing that the defendants had a meritorious defense to Cass’s claims before the court would set aside the default. Ferguson ignored the June 25,1999, order and still failed to respond to the requested discovery. On July 6,1999, however, Ferguson filed an Answer and Counterclaim.

¶6 On August 30,1999, the court conducted a hearing on Ferguson’s Motion to Set Aside the Default. Ferguson still had not responded to discovery. The District Court denied the motion but in doing so made it clear it was not denying the motion because of Ferguson’s tardy appearance, but rather because Ferguson refused to comply with the District Court’s order of June 25, 1999, compelling discovery.

¶7 On September 15, 1999, Ferguson filed a motion for “Relief from Judgment,” contending that the Amended and Supplemental Complaint relieved Ferguson of the Clerk’s April 30, 1999, entry of default. Cass responded by reminding the court that the basis of the August 30, 1999, order was Ferguson’s complete disregard of the court’s discovery order. Cass then filed a Motion for the Entry of a Default Judgment.

¶8 Another hearing was then held on December 17, 1999, during which Cass requested interim relief requiring Ferguson to post a bond. The District Court ordered Ferguson to post $1,200,000 bond to protect Cass from dissipation of Ferguson’s assets. The court granted Ferguson thirty days to post the bond and stayed consideration of Cass’s pending Motion for Entry of a Default Judgment. The District Court warned Ferguson, however, that failure to post the bond would result in entry of judgment against Ferguson. Despite the warning, Ferguson failed to post bond or provide discovery. Therefore, on February 22,2000, the District Court entered an order holding all defendants jointly and severally liable.

¶9 After a hearing on damages, the District Court entered judgment in favor of Cass for $1,736,547.20. Ferguson now appeals.

STANDARD OF REVIEW

¶10 We review a district court’s denial of a motion to set aside a default for slight abuse of discretion. Lords v. Newman (1984), 212 Mont. 359, 688 P.2d 290. The Court set forth the standard as follows:

*409 In these instances the reviewing court weighs the conflicting concerns of respecting the trial court’s sound discretion while recognizing the policy favoring trial on the merits. The resulting standard of review is that no great abuse of discretion need be shown to warrant reversal.... An alternative expression of this “no great abuse” standard is that only “slight abuse” is sufficient to reverse an order refusing to set aside a default.

Lords, 212 Mont, at 364, 688 P.2d at 293 (citations omitted).

¶11 This matter, however, implicates the District Court’s imposition of sanctions for discovery abuse. When considering whether a district court imposed proper sanctions for discovery abuse, we determine whether the district court abused its discretion. Owen v. F.A. Buttrey Co. (1981), 192 Mont. 274, 276, 627 P.2d 1233,1234. “[W]hen it is not possible for this Court to make a ready, confident, and accurate determination of a party’s good faith in the discovery process, we presume the correctness of the District Court’s action under Rule 37.” Owen, 192 Mont, at 280-81, 627 P.2d at 1237.

DISCUSSION

¶12 Did the District Court err when it refused to set aside the default against Ferguson?

¶13 Ferguson argues that the default should have been set aside when Cass filed her First Supplemental and Amended Complaint on June 16,2001. Ferguson contends that the filing of an amended pleading in effect supercedes the original pleading, thereby voiding any prior entry of default.

¶14 Ferguson’s contention would be correct if the District Court ultimately dismissed the case pursuant to Rule 55, M.R.Civ.P., for failure to appear. Rule 55(a), M.R.Civ.P., provides that the clerk of court may enter a party’s default if the party fails to plead or otherwise defend as provided in the Montana Rules of Civil Procedure.

¶15 A default under Rule 55, M.R.Civ.P., is set aside when a plaintiff files an amended or supplemental pleading. “It is elementary'... that when an amended pleading is filed it supersedes the original and the latter at once becomes functus officio, and that the party is not bound by the admissions in the pleading which has thus been superseded.” Berne v. Stevens (1923), 67 Mont. 254, 255, 215 P. 803, 804 (citations omitted).

¶16 Here, the Clerk of the District Court did indeed enter a Rule 55, M.R.Civ.P., default against Ferguson. As Ferguson contends, the filing of a First Amended and Supplemental Complaint rendered the Rule *410 55, M.R.Civ.P., default void. See Berne, 67 Mont, at 254, 215 P.2d at 804. However, the Montana Rules of Civil Procedure provide another mechanism by which a court may enter a default: default may be entered as a sanction for discovery abuses pursuant to Rule 37, M.R.Civ.P.

¶17 Under Rule 37, M.R.Civ.P., a party’s dilatory tactics in responding to discovery requests may result in sanctions.

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Bluebook (online)
2002 MT 226, 56 P.3d 322, 311 Mont. 406, 2002 Mont. LEXIS 486, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cass-v-composite-industries-of-america-inc-mont-2002.